Cash Basis P&L/BS

[Lion EA]

I have only one S-corp client that also has a SEP, so each year I confuse myself all over again. It has a great bookkeeping firm that gives me great financials, so I should be able to prepare a great Form 1120-S. Please ease my confusion.

2022 P&L has the amount paid for 2021 SEP paid during 2022. 2022 BS has the 2022 SEP that's an Other Current Liabilities - SEP Funding Payable.

When I prepare the 2022 1120-S (yes, it's on extension) do I use the actually paid 2021 SEP amount as a deduction on the Pension line? Or, do I use the to-be-paid 2022 SEP amount?

If the latter, then how does the 1120-S BS differ from the financials BS to make the 1120-S balance?

I don't know why this confuses me every single year or why my notes don't help me a year later. I even have an old printout from The Tax Book in this folder. Thank you for any help you can get through my thick skull.

The BS is always my weak point with entity returns. I took a lot of accounting classes for my MBA in finance, but not as many as you CPAs took, and that was over 40 years ago. This is my only SEP for an S-corp (I do have a SEP for an 1165 that dissolved into a Sch C so will be a short year and also is on extension, so you may hear from me again in May!). Thank you.

[jklcpa]

31 minutes ago, Lion EA said:

2022 P&L has the amount paid for 2021 SEP paid during 2022. 2022 BS has the 2022 SEP that's an Other Current Liabilities - SEP Funding Payable.

If the bookkeeping entries are recording(accruing) the payable each year or pay period, then the expense on the 2022 P&L should be the 2022 expense for the year based on the 2022 payroll deferral amount or percentage.  Then, in the balance sheet accounts, when cash is expended in payment of that liability, the cash account and the payable are both decreased.  The liability balance on the balance sheet at  12/31/22 should be the amount of 2022 deferral that has not yet been funded that will be paid in 2023.

The 2022 1120S should be deducting the 2022 deferral.